Flexdar Court Sides With Insureds: Reinforces Kiger; Broadens “Ambiguous” Interpretation of Absolute Pollution Exclusion Language

Written by Justin Gifford, J.D., General Counsel, EnviroForensics and PolicyFind

The Indiana Court of Appeals’ November opinion in the recent State Automobile Mutual Insurance Co. v Flexdar, Inc. (Ind. App. 2010) comes as good news to business owners like drycleaners who currently or have historically used tetrachlorethene (perc) or petroleum solvents that may have been released into the environment.  The Appellate Court’s decision re-examined the landmark American States Insurance Co. v. Kiger (662 N.E.2d 945, Ind. 1996) as well as its progeny and found for Flexdar, Inc., the insured.  (Kiger established that the absolute pollution exclusion found in many general commercial liability (GCL) policies is ambiguous and, as a result, ineffective in insulating insurers from their duties to defend and/or indemnify their insureds for claims made by the Indiana Department of Environmental Management that the insureds investigate and clean up releases of perc or other substances into soil and groundwater.)  Continue reading “Flexdar Court Sides With Insureds: Reinforces Kiger; Broadens “Ambiguous” Interpretation of Absolute Pollution Exclusion Language”

U.S. Circuit Court Finds Limits to Indiana’s Kiger Decision in Federated’s Unambiguous Policy Language

By David A. O’Neill, J.D., Director of Investigations, Policy Find

The question of how broadly the Indiana Supreme Court’s ruling in American States Insurance Company v. Kiger, 662 N.E. 2d 945 (Ind. 1996) can be interpreted was further decided on March 25, 2010 when the United States Court of Appeals, Seventh Circuit reached a decision in the West Bend Mutual Insurance Company v. U.S. Fidelity and Guaranty Company case.  This appellate decision is a caution to those owners and operators of retail gasoline service stations, who have been waiting to have their properties tested for pollutants in reliance on the effect of the Kiger ruling.  They will now be carefully reviewing the pollution exclusionary and definitions clauses in their policies to determine whether the Kiger or West Bend rules apply to their situations.

 In its published opinion, the Seventh Circuit explained its decision to affirm the U.S. District Court’s interpretation of a Federated Mutual Insurance Company umbrella liability policy which had been found to exclude coverage for pollution of neighboring property occasioned by leaking underground gasoline storage tanks. Continue reading “U.S. Circuit Court Finds Limits to Indiana’s Kiger Decision in Federated’s Unambiguous Policy Language”